Quick: How much money did you make last month? Too easy? Okay…how much money did you spend last month, and on what, exactly?
If you’re struggling to answer that one, you’re in good company. According to a poll from Gallup, two-thirds of Americans do not track their monthly spending. This blind spot may seem benign, but it’s often to blame for problems like snowballing credit-card debt, family fights, daily stress, and anxiety about the future.
The solution might be easier than you think: taking a few minutes each day to monitor and think about where your money is going can improve your life in dramatic ways. Tiller Money recently announced the results of a survey that asked 100 people, all spreadsheet users, about what they’ve gained from tracking their finances for at least 3 months.
1. 93% Agree – You’ll Have Better Insight into Your Spending Habits
Most of us have only a vague idea of where our money goes each month. But look around: Are you surrounded by overflowing closets, fitness devices gathering dust, and cosmetics spilling out of bathroom drawers? These are a result of your spending decisions.
In an era of one-click purchasing and automatic billing, it’s easier than ever to spend mindlessly: while we’re at work, eating dinner, sitting on the couch, or even sleeping. But when you pay attention to each and every outlay of cash – just a few minutes a day is all it takes – you’ll see trends, identify waste, and notice expenses that are misaligned with your values and priorities. Before long, you’ll find yourself questioning your spending decisions before you hand over your credit card.
2. 80% Agree – You’ll Have a Better Relationship with Your Spouse or Partner
Money is the leading cause of relationship stress, according to a survey by SunTrust Bank. Not kids, affairs, or household chores – money! It’s only natural that you and your partner will have different approaches to spending and saving, but this doesn’t mean finances have to cause friction. Eliminating this particular stressor demands open, transparent communication about money. Take the time to sit down with your partner and agree on savings goals. Then look back on your spending decisions together, without judgement or recrimination. This will force you to have a healthy discourse about your respective priorities and make compromises as a team.
3. 79% Agree – You’ll Spend Less Impulsively
We all spend impulsively from time to time — that’s not a bad thing. But making frequent or large or purchases on impulse — “What a cute car! I’ll take it!” — can ruin you. So before you make each purchase, pause and ask: “Did I come to the mall looking for a new pair of boots or did they catch my eye as I was walking past the store?” “Do I really think an Apple iWatch will make me more productive, or am I just trying to keep up with my friends?”
You may be spending more impulsively than you realize — and using money that was earmarked for more important uses. No one, regardless of wealth, likes to waste money! Tracking your purchases will force you to acknowledge unconscious spending, and with time, you’ll find yourself naturally spending in ways that don’t leave you feeling guilty later.
4. 81% Agree – You’ll Be More Confident About Reaching Your Financial Goals
We all have goals for the future. Perhaps yours is to retire early, travel around Europe, or take a year off to write a book. But while our goals often depend on money, few of us know exactly how much we’ll need or how much we have to save each month to get there.
People who track their spending know how much they’re earning, spending, and saving. So when they’re faced with a pay cut or unplanned medical expense, they know what levers to pull to keep saving at the right pace to achieve their goals.
5. 75% Agree – You’ll Feel Less Anxious About Money
Most of us avoid discussing or even thinking about money because it makes us uncomfortable. According to a survey by the American Psychological Association, the vast majority of Americans reported feeling stressed about money during the past month. We feel stressed about bills that are due and things we want to buy for ourselves or others that we can’t afford, and we feel anxious about our future financial security. But burying your head in the sand isn’t the answer. As Tiller’s survey shows, facing your financial fears head-on by owning up to and taking control of your spending is a proven way to reduce anxiety and stress.
If you’re among the majority of Americans who don’t have a process in place for keeping tabs on your cash flow, take a few minutes each day to adopt this powerful new habit. There are many, many tools out there that make it quick, easy, and yes – even fun. You can use a slick app with pre-built reports like Mint or YNAB, or create your own custom dashboard with Tiller, which lets you link your bank accounts to Google Sheets.
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